Now that both the House and Senate have passed their respective fiscal 2017 defense authorization bills, the next step is to reconcile the differences between the two versions. However, since Congress is out on an extended summer recess, a final version of the bill will not be unveiled until after Labor Day when they return.

The biggest issue lawmakers face is how to pay for weapons, people and programs both sides say the Pentagon needs. The House bill takes $18 billion from the Overseas Contingency Operations (OCO) account, a move rejected by the Senate and the Obama Administration.

Senate Armed Services Committee Chairman John McCain’s attempt to add $18 billion to the Pentagon’s base budget failed to obtain the 60 votes needed for passage.

But that’s not the only hurdle lawmakers face as they draft a final bill. In addition to a veto threat from the White House, here are some of the other sticking points:

Pay

Senate: Provides a 1.6 percent raise, which is the same as the budget request.

House: Provides military personnel with a 2.1 percent raise.

It is estimated that the bigger pay raise would cost an extra $300 million which would come out of the $18 billion the House took from the OCO account. If the Senate recedes to the House, they will have to find the money to pay for it.

End Strength

Senate: Reduces Army end strength by 15,000, Army National Guard by 7,000 and Army Reserve by 3,000 in accordance with the budget request.

House: Increases Army end strength by 5,000, Army National Guard by 8,000 and Army Reserve by 7,000. These increases would also be funded by the OCO money.

Health Care Reform

Senate: Unifies responsibility for military healthcare from the individual services to the Defense Health Agency.

• „ TRICARE Prime: 24 percent enrollment fee increase.
• „ TRICARE Standard: Changes name to TRICARE Choice; Establishes enrollment fee effective 2018 with increases until 2023; Indexes fees annually after 2023 by CPI health cost index; Eliminates deductibles for in-network care but doubles deductibles for out-of-network care.
• „ TRICARE Supplemental: Adds third option for beneficiaries who have other health insurance.
• „ Catastrophic Cap: Raises cap for currently-serving and retired families effective 2018 and adjusts annually after 2018 by COLA percentage.
• „ Pharmacy: Adopts a nine-year schedule that roughly double copays.

House: Consolidates responsibility for military healthcare from individual services to the Defense Health Agency.

• „ TRICARE Prime: Grandfathers currently serving and retired beneficiaries against DoD-proposed increases, but applies similar hike to new service entrants after Jan. 1, 2018.
• „ TRICARE Standard: Changes name to TRICARE Preferred; Establishes enrollment fee effective 2020; Indexes fees annually to COLA; No changes to deductibles; Applies Senate-like increases to new service entrants after Jan. 1, 2018.
• „ Catastrophic Cap: Retains current caps but applies increases to new service entrants after Jan. 1, 2018.
• „ Pharmacy: No changes to current law.

Both the House and Senate bills include initiatives that they believe would improve beneficiary access to care, care quality and system productivity.

Housing Allowances

Senate: Ties basic allowance for housing (BAH) to service members’ actual rent and utilities costs rather than the current flat-rate stipend based on estimated housing costs within a zip code. For dual-military couples or housing sharers, the bill divides BAH by number of service members in domicile.

House: No changes to current law.

The Senate will have a hard time convincing the House that their plan is sound. The Pentagon is strongly opposed to the changes and the House has voiced their concerns about cuts to BAH in recent years.

Selective Service Registration

Senate: Requires males and females to register.

House: Requires DoD report on continued utility of registration.

Acquisition Reform

Senate: Abolishes the position of undersecretary of defense for acquisition, technology and logistics (ATL) along with the seven assistant secretaries and deputy assistant secretaries serving the current ATL bureaucracy. Divides the duties between a newly- established undersecretary of defense for research and engineering and the renamed undersecretary for management and support.

House: Attempts to move DoD from complex, long-term systems toward incremental, rapidly fielded breakthrough technologies.

The Bottom Line

Whatever deal House and Senate lawmakers strike on a final bill, they still have to contend with the promised White House veto.

In its Statement of Administration Policy, the White House outlined several areas of disagreement they have with the bill including the biggest objection – the $18 billion the House raided from the OCO account.

The administration is also unhappy with the restructured military healthcare system and BAH changes.

Further, the administration accused lawmakers of trying to micromanage the Defense Department because of provisions that would reorganize DoD, prescribe the use of a wide range of contracting methods in circumstances that history has proven are not appropriate or efficient in meeting the military’s needs, and prescribe across-the-board cuts to senior military billets, civilian executives, and contractors.